CCL - electricity produced from renewable energy sources

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • CCL - electricity produced from renewable energy sources
  • Exemption withdrawn
  • Renewable sources
  • CCL exemption
  • Balancing and averaging periods
  • Sell and buy back arrangements
  • Applying the exemption to customer accounts

This guidance note provides an overview of the CCL exemption that can be applied to supplies of electricity that have been produced using renewable sources. This note should be read in conjunction with the following guidance notes:

Notice CCL1/4 ; De Voil Indirect Tax Service V21.130 (subscription sensitive)
  • Climate Change Levy (CCL) - main rates
  • Registering for CCL
  • CCL - accounting and record keeping requirements
  • CCL - reliefs - outside the scope and exempt supplies
  • CCL - reliefs - reduced rates and certificates
  • CCL - penalties and interest
Exemption withdrawn

Please note that for renewable source energy generated on or after 1 August 2015 the CCL exemption no longer applies. The exemption outlined below will still be applicable to renewable source energy that was generated before this date providing all of the relevant conditions have been satisfied. HMRC announced in Autumn Statement 2015 that following consultation, a transitional period for electricity suppliers to apply the CCL exemption on renewably sourced electricity generated before 1 August 2015 will end on 31 March 2018.

Please note that if a business has installed renewable generation capacity to produce electricity on-site then there will be no requirement to account for CCL on self-supplies of renewable source energy and the removal of the CCL exemption does not affect these types of supplies.

Renewable sources

These are sources of energy other than peat, fossil fuel and nuclear fuel. Waste will be regarded as a renewable source for the purposes of CCL exemption, providing fossil fuel does not make up more than 90% of its energy content. Fossil fuel includes coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum or petroleum products.

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